Western Expats in Dubai Like Their Luxury

Dubai, a part of the United Arab Emirates, often conjures up images of unbridled consumerism and an obsession with all things luxurious. That perception may not be too far from the truth, according to the findings of a study by insurance group Standard Life.

“Almost all the UAE-based western expats allocate some of the disposable income to lavish spending on luxury items,” is the main conclusion of the Western Expatriate Wealth Study released by the insurer today.

A majority (97%) of the U.A.E. expats surveyed said they spend part of their income on “luxurious lifestyle choices”, which is nearly twice as many as their counterparts in other expat destinations such as Singapore (49%) and Hong Kong (53%).

The report also says that U.A.E. expats have “a less prudent” approach towards retirement planning and they rely more on advice from family members on their fiscal issues than in the two Asian cities.

That apparent disregard for serious retirement planning is odd, in particular because many expats move to “high earning, tax friendly cities with the intention to save and secure their financial future,” according to Standard Life’s Chris Divito.

In addition, another recent survey by YouGov found that financial concerns and debt are the biggest causes of stress among U.A.E. residents with 57% of the respondents saying “they have a long way to go before becoming debt-free.”

“We have been hearing about concerns regarding personal financial health in the U.A.E. for a long time now and they are ever-increasing,” said Nima Abu-Wardeh, founder & CEO of www.cashy.me, an online platform that tries to encourage more responsible finance management among U.A.E. residents.

“Fast-paced lifestyles, tax-free living and high disposable incomes all contribute to this and easy access to external sources of income aggravates the trend further,” Ms. Abu-Wardeh said.

That lavish spending on luxury items may please hoteliers and the many high-end brands doing business here, but also raises alarm bells, especially with regards to the rise in consumer debt as illustrated by central bank data.

Abdulaziz Al Ghurair, one of the country’s most influential bankers, recently said the introduction of a credit bureau would spell the end of residents being able to apply for several loans or credit cards with different banks at the same time. And while that is generally seen as a good step, it could be less welcome news for those residents racking up debt in order to be able to live the luxury lifestyle they crave for.